All probable scenarios and this week as indicated in posts last week. Early AM lows (3:30 AM ish) most likely lead to a bounce attempt into around the open (8:45 AM). Probabilities favor that this bounce is most likely to fail to follow through and turn down into the afternoon. Highest probabilities favor weakness into the afternoon, however, there is a possible early reversal timing around 11:15 AM to watch for. Bounce around this timing could bias upticks into the afternoon session. Similarly, in the unlikely event that strength off the 3:30 AM bounce leads beyond the 8:45 AM (or market open) likely timing would target into around 11:15 AM. As such, this would be a likely turning window and lead to weakness into the close.
Currently, highest probabilities favor moderate/choppy strength into 11:00 AM +/- with a fair consensus on weakness thereafter into the afternoon. There could be a some moderate bounce into the close but it is important to note that our 1.5-day wonder is approaching expiry. We will post an update to the dily probabilities shortly - which have been prescient to say the least. So, currently a brick wall is approaching and it will require a huge central banker wrecking ball to break through it - failing that the coming reversal/failure has high probabilities of making our previous decline so far this month look moderate in comparison.
As represented in daily projections: weakness was expected in terms of down from yesterday's AM to today's AM. Even with the bounce on-going, that condition has been met and bias shifts upwards into tomorrow - possibly slightly beyond - hence the 1.5-day wonder. The end of this week has probability for the strongest weakness so far seen in this move from the highs, this probability favors any up move near-term to be a part of a failed retest and 1.5 day wonder. Today's probabilities favor an opening strength followed by weakness into the afternoon.
A few additional comments: The fact that we did not test below the 200-day simple moving average potentially creates a bearish situation - one in which the current bounce continues directly to its inflection point and then the 200 day is broken directly thereafter. Normally more weak-hands/strong-hands trade should occur around and slightly below the 200-day simple moving average area.
If intervention occurs too strongly or the bears capitulation is too fast and/or combined with bulls urge to buy beign too strong, this means these hands (conviction) have not been sufficiently tested. Odds of break of 200-day moving average increase significantly in such a situation as opposed to odd of testing it on next drop. The only saving grace would be a retest of 200-day sometime today...but that does not fit extremely well with the scenarios.
Below is an analysis posted in our "expert lounge" last night as the futures market opened. Now that we have more accurate probabilities, a case discussed last night has been virtually eliminated. The ideal situation overnight would have been for weakness overnight with strength into the cash open - timing and market structure for this is not cooperative and no longer a high probability. Best timing fo any retracement or bounce is before cash market or something into the close. Both of these possibilities are currently not high. What is currently highest probability is a pronouncedly weak day without much strength appearing which should begin to continue into tomorrow morning and then into a bounce Tuesday Am to Wednesday AM. This is represented in daily MSP projections which will be posted sperate post.
Below we can see trading levels indicated in cyan and yellow horizontal lines and also the lunar cycle - which is indicating that any focus on a bounce to retest highs now is likely premature. DOW has broken important levels (with downside probes below the 17680 level) this likely targets the 17,100 to 17,000 levels fairly directly - most likely after a short and swift bounce attempt into mid week which fails.
We are entering a period of increasing bearishness generally and especially on Fridays. This is important to remain aware of. After a strong down period, a bounce is to be expected. Currently, it looks as if there could be some weak hands left to be tested. Downside volatility into around 12:00 PM is showing highest probabilities.
Currently highs into around 6:30 AM +/- are the leading probability which fits well with the downside potential into 12:00 PM. This volatility down could be deep or it could result in a consolidation via the Magenta projection. We will update in the Lounge as more information comes in. Either way, such a scenario would likely lead to a fairly decent bounce/strength in the afternoon.
This morning, as posted the majority of market structure projection (MSP) favored downward probability. Explicit reference was made to pronounced weakness potential if the Gold projection tracked. At 7:30 AM roughly, we posted in the lounge that the Gold projection was indeed tracking and reiterated on the initial cash bounce that downside was most probable outcome for the day. Trading with these types of edges makes a difference, as can easily be seen in the charts we have posted since the launch of the site.
Expectations at today's close were for a fairly strong bounce into 3:00AM or 6:00 AM. If the markets bounce into 6:00 AM then it is entirely plausible to experience a similar drop as todays into around noon and then finally a bit better rally - this scenario is the most bearish. A 3:00 AM high would leave open the potential for a consolidation/pullback into around 11:00 AM tomorrow but thereafter a quite strong rally.
We will not be continuing to post MSP premarket for much longer and do hope that this work have been of value for our readers.
Lots of Elliottwave analysis looking for a very pretty wave 5. From the data, it would appear best assumption regarding wave 5 is truncation. However, it is often in my experience that idealized patterns DO NOT materialize at highs. So, with that, today would need to be a particularly bullish day to keep upward potential alive. Data from this perspective is overridingly bearish. Most potentials that are probable today resolve bearishly into the close as shown below. Yesterday, Gold projection tracked well as posted early in the morning in the lounge, with a 10:30 AM bounce and drop. Today the Gold projection would most likely come into play if the markets were showing continued strength into the 8:00 AM to 9:00 AM area or a bit earlier. There are other considerations which could line up to favor this projection and we will update in the lounge accordingly. If the GOLD MSP were to occur, the outcome for today would be pronounced weakness the whole day and into the close.
However, if the threads of upward potential to want to apply, a downward wave into the cash open is the first sign that the cash session could turn productive.
There is some potential for a bounce today which would likely be evidenced by downward movement into open. This scenario would favor probabilities to reverse into the afternoon. However, there is still quite a lot more downside MSP left over the next weeks - the implication is the move has only started. and these forces should not be taken lightly. Probabilities DO skew towards a pronounced down move over this time.
Today has potential for a retrace, however, 9:00 AM upward movement skews probabilities downward once again into the afternoon or close.
Markets have been exceedingly sloppy and strangely uncooperative/resilient. This is highly unusual for market structure projection to show so much downward predisposition to so little effect. Last week had the makings of a lasting high yet the divergence continues. The usual effect when the market metronome gets this far out of sync is a strong and swift reversion.
Again, upside does not figure most prominently on the probability list...if any is to occur watch for weakness after the open and buying around mid-day. Highest probability is for weakness into 3:00 PM area.